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Vonage Holdings Corp (NYSE:VG)
Beneish M-Score
-3.13 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Vonage Holdings Corp has a M-score of -3.13 suggests that the company is not a manipulator.

VG' s Beneish M-Score Range Over the Past 10 Years
Min: -5.34   Max: 0.99
Current: -3.13

-5.34
0.99

During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corp was 0.99. The lowest was -5.34. And the median was -3.01.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Vonage Holdings Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.9442+0.528 * 1.0379+0.404 * 1.0551+0.892 * 1.0395+0.115 * 0.9619
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9524+4.679 * -0.147-0.327 * 0.9905
=-3.13

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $20.8 Mil.
Revenue was 226.824 + 230.124 + 223.36 + 221.858 = $902.2 Mil.
Gross Profit was 148.608 + 153.014 + 147.961 + 149.432 = $599.0 Mil.
Total Current Assets was $117.4 Mil.
Total Assets was $750.9 Mil.
Property, Plant and Equipment(Net PPE) was $51.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $64.9 Mil.
Selling, General & Admin. Expense(SGA) was $454.5 Mil.
Total Current Liabilities was $170.7 Mil.
Long-Term Debt was $184.0 Mil.
Net Income was 7.931 + 3.406 + 3.433 + 8.347 = $23.1 Mil.
Non Operating Income was 0.154 + -0.247 + -0.05 + 0.032 = $-0.1 Mil.
Cash Flow from Operations was 14.572 + 46.105 + 37.665 + 35.237 = $133.6 Mil.
Accounts Receivable was $21.2 Mil.
Revenue was 219.73 + 214.533 + 214.71 + 218.878 = $867.9 Mil.
Gross Profit was 148.687 + 149.881 + 149.03 + 150.486 = $598.1 Mil.
Total Current Assets was $133.9 Mil.
Total Assets was $678.0 Mil.
Property, Plant and Equipment(Net PPE) was $46.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $53.2 Mil.
Selling, General & Admin. Expense(SGA) was $459.1 Mil.
Total Current Liabilities was $165.4 Mil.
Long-Term Debt was $157.9 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(20.846 / 902.166) / (21.239 / 867.851)
=0.02310661 / 0.0244731
=0.9442

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(598.084 / 867.851) / (599.015 / 902.166)
=0.68915517 / 0.66397426
=1.0379

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (117.436 + 51.881) / 750.933) / (1 - (133.943 + 46.35) / 677.955)
=0.77452449 / 0.73406347
=1.0551

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=902.166 / 867.851
=1.0395

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(53.205 / (53.205 + 46.35)) / (64.867 / (64.867 + 51.881))
=0.53442821 / 0.55561551
=0.9619

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(454.522 / 902.166) / (459.073 / 867.851)
=0.50381194 / 0.52897675
=0.9524

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((184.014 + 170.676) / 750.933) / ((157.912 + 165.384) / 677.955)
=0.47233242 / 0.47686941
=0.9905

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(23.117 - -0.111 - 133.579) / 750.933
=-0.147

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Vonage Holdings Corp has a M-score of -3.13 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Vonage Holdings Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.10840.89120.80990.86121.01481.19451.17150.98570.86591.0841
GMI 1.0160.84320.950.97221.02740.97150.99980.9771.00911.0318
AQI 0.83673.2811.49660.98070.61972.9950.90571.13381.11551.0093
SGI 2.25631.36361.08680.98770.99550.98340.97560.97641.04811.0301
DEPI 0.59820.64170.72750.94130.92341.13870.99360.86940.80270.9147
SGAI 0.71040.8570.68150.90440.891.02121.06211.10170.97660.8859
LVGI 0.7811.43771.12750.99851.28070.31630.87971.15231.0351.0192
TATA -0.19730.0081-0.1021-0.1147-0.56640.4862-0.152-0.0931-0.1072-0.1354
M-score -2.17-1.54-2.90-3.17-5.340.99-3.07-2.99-3.04-2.99

Vonage Holdings Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.98570.94720.91030.96580.8661.04831.12061.01191.0840.9442
GMI 0.97030.98130.9870.99020.96650.96790.97130.98331.03341.0379
AQI 1.13381.23251.23451.16841.11551.02651.05391.08011.00931.0551
SGI 0.97640.99811.02351.04091.0481.03231.01871.01611.03021.0395
DEPI 0.86940.79050.72980.8690.80270.85620.90390.95950.91470.9619
SGAI 1.07651.07271.03190.9711.00330.9730.96550.98180.93890.9524
LVGI 1.15231.04711.04511.07931.0351.11141.08151.18491.01920.9905
TATA -0.0931-0.1139-0.1269-0.1334-0.1072-0.1035-0.1136-0.1125-0.1354-0.147
M-score -2.99-3.03-3.10-3.07-3.07-2.95-2.91-3.02-2.99-3.13
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